Fraud and corruption - a global perspective
Curtin University achieves its strategic objectives using its own staff, external partners and collaborators, agents and intermediaries, contractors, consultants and other parties who operate at a local, national and international level. This creates some challenges in relation to the management of fraud and corruption risks:
- There is increased exposure from having to deal with governments, institutions and officials in foreign countries where there may be a greater propensity for fraudulent or corrupt behaviour. The reality of the situation is highlighted in the global indices/surveys below:
- The Global Corruption Index
- The Corruption Perceptions Index
- The Bribe Payers Index
- Ernst & Young - EMEIA Survey
The indices/surveys also reveal, however, that risk to the University is reduced by way of the relatively low levels of corruption in Australian society and institutions, and the lower likelihood of Australian companies engaging in bribery overseas. Nevertheless, the University's fraud and corruption control framework recognises these risks and the need for controls to minimise or manage them.
Further to the above, overseas anti-corruption and anti-fraud legislative/regulatory regimes are maturing and expanding with extra-terrritorial reach. The University is faced with the possibility of sanctions being imposed should its staff, partners or agents, while conducting University business, engage in behaviour that is caught by the rules and regulations under those regimes e.g. bribery of foreign officials. A recent example where a multinational organisation has come unstuck when operating in an overseas jurisdiction is British company Glaxosmithkline (in China).
Research indicates that Australian organisations are still coming to terms with these risks (see section below: KPMG - Incidence of Fraud and Corruption in Australia).
The University recognises that in performing certain business activities such as locating and developing international campuses and promoting the enrolment of international students, it must operate in accordance with relevant foreign anti-bribery or anti-corruption legislation, in particular, the:
- Bribery Act 2010 (UK)
- Foreign Corrupt Practices Act 1977 (US)
- Anti-Corruption Commission Act 2009 (Malaysia)
- Prevention of Corruption Act 1993 (Singapore)
Compliance with these items of legislation has been assigned to a Compliance Officer in accordance with the University's Compliance Framework.
Transparency International's Global Corruption Barometer addresses people's experiences with bribery and details their views on corruption in the main institutions in their countries.
The 2013 report draws on a survey of more than 114,000 respondents in 107 countries. Refer to Global Corruption Barometer 2013 for more detailed information.
From the survey results, no country perceived their education system to be the most corrupt of institutions in the country.
NOTE: In relation to responses from Australian respondents to levels of corruption in Australia; refer to graphic:
- 59% of respondents stated that the level of corruption in Australia had increased either a little or a lot in the past two years, while 36% stated it had stayed the same.
- Only 19% of respondents felt that educational institutions in Australia were corrupt/extremely corrupt.
Transparency International's Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be.
A country or territory's score indicates the perceived level of public sector corruption on a scale of 0 - 100, where 0 means that a country is perceived as highly corrupt and 100 means it is perceived as very clean.
A country's rank indicates its position relative to the other countries and territories included in the index. The 2012 index includes 176 countries and territories.
NOTE: In the 2012 index, Australia was ranked as the equal 7th least corrupt country with a score of 85. Amongst the G20 countries, it was ranked the least corrupt. Refer to Corruption Perceptions Index 2012 for more detailed information.
Transparency International's Bribe Payers Index is a unique tool capturing the supply side of international bribery, specifically focussing on bribes paid by the private sector.
Countries are scored on a scale of 0-10, where a maximum score of 10 corresponds with the view that companies from that country never bribe abroad and a 0 corresponds with the view that they always do.
The 2011 Bribe Payers Index ranks 28 of the world's largest economies according to the likelihood of firms from these countries to bribe when doing business abroad. It is based on the results of Transparency International's 2011 Bribe Payers Survey.
NOTE: In the 2011 index, Australia was ranked as equal 6th with a score of 8.5, which reflects the low likelihood of overseas bribery by Australian companies. Refer to Bribe Payers Index 2011 for more detailed information.
Ernst & Young surveyed 3,000 employees in 36 countries across Europe, Middle East, India and Africa (EMEIA) in late 2012. A report on the outcomes from the survey was issued in May 2013: Navigating todays' complex business risks - Europe, Middle East, India and Africa Fraud Survey 2013.
The survey showed that:
- One in five employees were aware of financial manipulation in their own company in the previous 12 months.
- 42% of board directors and senior managers were aware of irregular financial reporting in their company.
- 57% believed bribery and corruption were widespread in their country.
- Executives and their teams were under increased personal pressure to produce growth in extremely challenging conditions.
For almost two decades, KPMG has been undertaking research in the growth and extent of fraud in corporate Australia and New Zealand. The outcome from the latest survey was published in Feb 2013 – see A survey of fraud, bribery and corruption in Australia & New Zealand 2012.
Key findings from the survey were as follows:
- $373 million stolen over the past two years.
- The average value of fraud loss is now more than $3 million.
- 47% of respondents believe major frauds occur due to deficient internal controls. However, strong internal controls and risk management uncovered the culprits.
- Typical fraudster tends to be male. Men are three times more likely to commit a fraud.
- Greed and personal financial pressure are the most common motivators.
- Collusive fraud is growing, particularly between employees and external parties. Technology advances and increasing use of social media are likely to result in more collusion.
- Australian and New Zealand organisations are increasingly exposed to tougher anti-bribery and corruption regimes in the countries in which they do business. However, they are often ill-equipped to deal with it.